Alliance eyes China fund joint venture
The US asset manager is in talks with Ping An Securities
The securities brokerage arm of China's second-largest life insurer is in talks with leading United States asset manager Alliance Capital Management on setting up a mainland fund joint venture.
If successful, the deal would allow Alliance to establish its first footprint in China's underdeveloped financial industry and advance the ambition of Ping An Insurance (Group) to become a full-service mainland financial conglomerate.
Ping An Securities, almost 64 per cent beneficially owned by newly Hong Kong-listed Ping An Insurance, has been in talks with Alliance for months.
Sources said a final agreement had yet to be reached. The search is also on for a chief executive for the joint venture.
Ping An and Alliance officials could not be reached for comment yesterday.
Foreign players can establish a foothold in China's mutual fund industry only through joint ventures with local partners.
New York-based Alliance, which managed US$480 billion of assets in 19 countries at the end of last month, is expected to follow previous foreign investors in China's fund industry in taking a 33 per cent stake in the joint venture, the maximum foreign interest permitted under existing mainland rules.
Most of the dozen or so Sino-foreign fund joint ventures were set up with 100 million yuan of registered capital, the minimum required by the securities regulator.
The choice of Ping An Securities as the Chinese partner of the joint venture is intended to skirt mainland restrictions barring insurance companies from being stakeholders of mutual fund managers.
Asset management companies that insurers are permitted to set up to manage their own assets cannot sell fund products to the public.
Shenzhen-based Ping An has long wanted to become a full-service financial holding company in a country that has maintained strict barriers between the banking, securities and insurance sectors in the hope of minimising financial risks.
It controls insurers, a bank and a trust and investment firm in addition to the securities brokerage.
About 39 firms managed 86 portfolios in China's ballooning mutual-fund industry by the end of last month. The industry sold a record 143.6 billion mutual fund units during initial public offerings in the first half.
